Debt Advisory Fees
Hey Everyone - trying to do some benchmarking for debt advisory fees in the middle market in today’s market. Understand that best efforts syndicated leverages loan fees are ~75 - 125bps between arrangement / structuring / incentive fees. How does that look for private credit debt advisory (say you’re retaining a Lincoln or someone to go raise $100M unitranche for you) - same general zip code? Presume it gets a bit more expensive as you go deeper in the cap structure (second lien / mezz)?
welcome any feedback
I believe Lincoln debt advisory charges 2-3% of total capital raised, subject to a minimum fee of $2.0M.
That the case for PE-owned PortCos / platform targets when the deal team pawns off the work to them? Seems high…
Seems very high
I remember doing 1-1.5% for senior and 2-3% for second lien / mezz. I think we would usually base it off committed capital and not necessarily capital funded at closing and sometimes use a lehman scale to triangulate us to the fee we wanted. You have to remember that companies going to investment banks to raise debt in the private markets are typically doing so because (i) the deal is a little hairier (company can't just call up a lender they have a relationship and get the deal done), and/or (ii) they want to run a process to get absolute best terms. So, it usually means a decent amount of work / risk to getting deal done and the better deal terms would most likely pay for IB fees. I would assume it's less for acquisition financing when there are already decent materials prepared etc.
it depends
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